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Upwards movement continued for Friday as the main wave count expected.

Summary: Assume the trend remains the same until proven otherwise. The target for the middle of a third wave to end is at 1,296. If price turns and breaks below 1,238.74, then the breakout was false. The target for a deeper pullback would be at about 1,216.

Members who followed trading advice and opened long positions as soon as price broke above 1,244.49 may either leave stops at breakeven or may take some profits now. The alternate wave count has enough support from classic analysis to have a reasonable probability, so it is possible that profits may disappear.

New updates to this analysis are in bold.

Last monthly and weekly charts are here. Last historic analysis video is here.

Grand SuperCycle analysis is here.

MAIN ELLIOTT WAVE COUNT

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

A third wave up now at three degrees at the daily chart level may have begun.

Because minute wave ii is a little deeper than the 0.618 Fibonacci ratio of minute wave i, and because this is the middle of a larger third wave, the appropriate Fibonacci ratio for a target for minute wave iii is 2.618.

Within minute wave iii, no second wave correction may move beyond the start of its first wave below 1,226.53.

Corrections should now begin to be more brief and shallow along the way up for this wave count. Upwards movement should have support from volume and show an increase in momentum. It is concerning that Friday’s upwards day does not have support from volume.

Add a short term base channel about minute waves i and ii as shown in pink. Copy this over to the hourly chart. The lower edge should now provide support for any deeper corrections along the way up. Given the stage the wave count is at, this wave count may be discarded if price breaks below the lower pink trend line.

The power of the middle of an upcoming third wave should be able to break above the upper edge of the pink base channel, and also the wider black base channel. If price does not do that within the next few days, this wave count would be in doubt.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

The middle of the third wave may have passed. Alternatively, the degree of labelling within minuette wave (iii) may be moved back down one degree because this may be only subminuette wave i complete.

Price is beginning to break above the upper edge of the pink base channel. When minuette wave (iv) is complete, then minuette wave (v) would be expected to be a very strong extension that should have the power to break back above the base channel and then stay there.

Minuette wave (iv) may not move into minuette wave (i) price territory below 1,238.74. At this stage, if this wave count is invalidated at the hourly chart level on Monday, then the alternate would have a much higher probability.

This wave count expects that minuette wave (iv) may be the last reasonable sized correction for some days. Momentum should begin to build along the way up.

ALTERNATE ELLIOTT WAVE COUNT

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This alternate wave count expects that the breakout may be false. Sometimes this happens, so this wave count would provide a road map for what may happen next.

Intermediate wave (1) may have been over later. The structure within it still looks adequate.

Intermediate wave (2) may be an incomplete expanded flat correction, and so far within it minor wave B would be a 1.57 length of minor wave A, now outside the normal range of 1 to 1.38.

If minor wave B is over here, then the appropriate Fibonacci ratio for minor wave C would be 1.618 the length of minor wave A. If minor wave B continues higher, then this target must also move correspondingly higher.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,123.08.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Minor wave B may now be complete. This wave count expects a trend change and strong downwards movement for a few days towards the target at 1,216.

If minor wave B continues higher, at 1,272 minor wave B would reach twice the length of minor wave A. At that stage, the probability of an expanded flat unfolding would be so low the idea should be discarded.

A new low below 1,238.74 would see this wave count substantially increase in probability.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

The last four weekly candlesticks are all green and all show a constant decline in volume. At the weekly chart level, this supports the alternate wave count but is very concerning for the main wave count. A third wave up at multiple degrees should have good support from volume.

On Balance Volume is nearing resistance, but it is not there yet.

RSI is not overbought. There is room for price to rise further.

ADX indicates a possible trend change from down to up, but does not yet indicate there is an upwards trend.

DAILY CHART

Gold Daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

The decline in price for Friday’s session supports the alternate wave count but is a concern for the main wave count. If price does turn down here, then initially look for support at the upper blue line.

The consolidation pattern which ended this week may be a bull flag. It is not a very good one though. They are more reliable when they have a slope against the primary trend and this one has no slope. A target using the measured rule is calculated for the pattern.

ADX is extreme and Stochastics exhibits triple divergence with price while overbought. These two indicators strongly support the alternate Elliott wave count.

There is enough bearishness in this picture to be doubtful about the main wave count, but still assume the trend remains the same (upwards) until proven otherwise. Protect or take some profits.

GDX

DAILY CHART

GDX Daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

It looks like GDX may be completing a flag pattern. These are the most reliable of continuation patterns. The target using the measured rule would be about 27.93. First, GDX needs to breakout above the upper edge of the flag pattern, preferably on a day with an increase in volume.

There was some small support for downwards movement during Friday’s session from volume. If price moves lower, look for support at the lower blue trend line of the flag pattern.

This analysis is published @ 02:40 a.m. EST on 25th February, 2017.